Analyst picks for 28 May 2012
QUANTITATIVE STRATEGIST
DAVID RODRIGUEZ
My pick: Sell euro-dollar rallies
Expertise: System trading
Average time frame of trades: 2 to 10 weeks
I remain in “sell rally” mode on euro-dollar, and I would like to sell any significant bounce in the otherwise fast-falling currency pair. Recent CFTC Commitment of Traders data shows large speculators at their most net-short euro-dollar in history, and any short-covering rallies could be quite sharp. But selling against major resistance of $1.2832 with a target of $1.25 and lower is my preference. A minimum 1:1 reward/risk implies entry of $1.2661 or better.
STRATEGIST
ILYA SPIVAK
My pick: Stay short euro-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I sold euro-dollar on 8 May at $1.3004 as prices broke support at $1.3025. The Greece fiasco is on hold until elections in mid-June while headwinds to global growth from China and the EU are severe but thematically familiar, meaning the greenback has room to correct lower. I will look to the bounce as an opportunity to add to short euro-dollar exposure but have adjusted my stop down to $1.2865 as a precaution.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Long euro-Swiss franc. Short euro-dollar
Expertise: Combining fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
The heavy risk deleveraging trend through the first half of May flagged this past week, so I will adjust to it. The euro-dollar break below $1.2625 was a good setup, but first half profit should be taken and stop on remainder trailed to break-even. Euro-Aussie didn’t play free of risk-influence, but Canadian dollar-Swissie looks much better in that regard above SFr0.9425. I will also stick with euro-Swiss franc awaiting the SNB’s effort.